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Chapter 8


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Chapter 8

  1. 1. Chapter EightExperimentation in Marketing Research
  2. 2.  Explain the difference between descriptive and experimental research Identify the three conditions indicating that one variable has a causal influence on another Discuss the most appropriate applications of laboratory and field experiments List and explain the threats to internal validity and external validity of experimental resultsChapter Objectives 8|2
  3. 3.  Explain the difference between pre- experimental and true experimental designsChapter Objectives (Cont’d) 8|3
  4. 4.  Eddie Bauer, a leading tri-channel specialty retailer was looking for a way to draw more shoppers into their stores Indiana University students conducted an in-store advertising experiment using electronic window posters (images displayed on plasma screens) on 3 selected storesEddie Bauers Electronic Windows 8|4
  5. 5.  RESULTS ◦ The number of passersby who entered the control stores went up 7 percent ◦ Sales soared 56 percent compared to the weeks before the installation of digital windowsElectronic Windows (Cont’d) 8|5
  6. 6.  An experiment is a procedure in which a company manipulates one (or sometimes more than one) independent or cause variable and collects data on the dependent or effect variable while controlling for other variables that may influence the dependent variableExperiment 8|6
  7. 7. Advertising Experiment Will replacing commercial A with commercial B lead to a marked increase in consumer preference for a company’s brand?Pricing Experiment Can a company improve the profitability of its fashion clothing line by increasing its price by 10 percent?Sales Productivity Experiment Will an increase in the average number of sales calls per customer from six to eight per year significantly improve sales?Shelf Space Experiment Will decreasing the shelf space allocated to brand X detergent by 25 percent significantly lower its sales?Direct Mail Experiment Will it be worthwhile to mail last years donors an attractive (but expensive) brochure describing the company’s activities and soliciting higher contributions for this year? 8|7
  8. 8.  This research asks consumers whether they would buy more of a product if its price were lowered Descriptive survey data will merely suggest causationDescriptive Research 8|8
  9. 9.  Manipulates the independent variable or variables before measuring the effect on the dependent variable ◦ The effect of price changes on sales volume of a particular product can be examined by actually varying the price of the product The very basis of experimental research lies in the manipulation of independent variablesExperimental Research 8|9
  10. 10.  Temporal ordering of variables ◦ X  Y not Y  X Evidence of association ◦ X and Y are related ; presence of X  presence of Y; absence of X  absence of Y Control of other causal factors ◦ X  Y, Z  YConditions For Inferring Causality 8| 10
  11. 11.  A laboratory experiment is a research study conducted in a contrived setting in which the effect of all, or nearly all, influential but irrelevant independent variables is kept to a minimum A field experiment is a research study conducted in a natural setting in which the experimenter manipulates one or more independent variables under conditions controlled as carefully as the situation will permitLaboratory vs. Field Experiments 8| 11
  12. 12.  Internal validity is the extent to which observed results are solely due to the experimental manipulation Laboratory experiments are generally high on internal validity Field experiments are generally low on internal validityInternal Validity 8| 12
  13. 13.  External validity is the extent to which observed results are likely to hold beyond the experimental setting Laboratory experiments are generally low on external validity Field experiments are generally high on external validityExternal Validity 8| 13
  14. 14.  Practical Considerations ◦ Time ◦ Cost ◦ Exposure to competition ◦ Nature of the manipulationDeciding Which Type ofExperiment to Use 8| 14
  15. 15.  Dunkin Donuts and Baskin-Robbins are now offered in “combo” stores KaBloom is testing kiosk flower sales in a variety of locations Utilities companies are experimenting with providing Internet services via existing power linesTest Marketing 8| 15
  16. 16.  McDonalds test-marketed McPizza to strengthen the after-4pm adult market ◦ Introduced McPizza with heavy advertising, emphasizing speedy service for pizza ◦ McPizza received favorable nods in some test markets and had partial rollout nationallyMcDonalds Tests McPizza 8| 16
  17. 17.  Pizza Hut, a leading competitor, reacted aggressively to McDonalds move by running a buy-one-get-one-free promotion wherever McPizza was introduced The sales performance of McPizza did not meet managements expectationsMcDonalds Tests McPizza(Cont’d) 8| 17
  18. 18.  Step #1 Pre-recruitment Step #2 Background: habits and practices Step #3 Exposure to real advertising in a competitive context Step #4 Simulated store purchase Step #5 Post: purchase inquiry Step #6 Respondents take product home for usage Step #7 Post: usage evaluationSimulated Test Marketing 8| 18
  19. 19.  Created a virtual store to determine how products catch a consumers eye Computer 3-D graphics create a feeling of being in a store, walking past shelves of grocery items just as in a real store Consumers can pick items off the virtual shelves to examine them as in real store and can select items they would buyVirtual Test Markets-- Ray Burke,Professor of Business Administrationat Indiana University 8| 19
  20. 20.  Virtual simulated marketing tests will enable companies to examine consumers reactions to new products, product line extensions, prices, packaging, and merchandisingVirtual Test Markets 8| 20
  21. 21.  Electronic scanners at the checkouts capture the product sales Marketers of packaged goods conduct sophisticated field experiments The data from the stores are transmitted electronically to central computers for analysis and interpretation Information Resources Inc. (IRI) and ACNielsen offer marketers a variety of services through their information system called BehaviorScan and ScantrackScanner Data Analysis 8| 21
  22. 22.  Web-based experimentation will enable companies to test a wide range of possible marketing mix changes and statistically model consumer responses to these changesWeb-Based Experiments 8| 22
  23. 23.  Random people were selected while visiting the company’s website The questionnaire asked them to complete a short questionnaire while on the site Participants are shown random test banner ads Participants fill out a second survey, answering questions about the impact of the banner ads on their impressions of the brandWeb-based Experiments Conductedto Test the Effectiveness of BannerAdvertising 8| 23
  24. 24.  What are the independent variables? What is the dependent variable? What are some validity threats?Web-based Experiments Conductedto Test the Effectiveness of BannerAdvertising (Cont’d) 8| 24
  25. 25.  The presence of any condition or occurrence (other than the independent variable manipulation) that can offer a compete explanation for the experimental results is a threat to internal validityInternal Validity 8| 25
  26. 26.  History Maturation Pretesting Instrument Variation Selection MortalityThreats to Internal Validity 8| 26
  27. 27.  External validity of experimental results relates to their generalizability The various internal validity threats also indirectly affect external validity Biases that stand in the way of generalizing experimental results: ◦ Reactive bias ◦ Pretest-manipulation interaction bias ◦ Non-representative-sample biasThreats To External Validity 8| 27
  28. 28. 8|28
  29. 29.  Pre-experimental designs exert little or no control over the influence of extraneous factors  These studies are not much better than descriptive studies when it comes to making causal inferences  Pre-experimental: emphasizes the fact that these studies are more exploratory than conclusive as far as causal inferences are concernedPre-Experimental Designs 8| 29
  30. 30.  O = observation or measurement X = experimental manipulation EG = experimental group CG = control group (R) = random assignmentNotations for DescribingExperimental Designs 8| 30
  31. 31.  One Group, After Only ◦ EG X O One Group, Before and After ◦ EG O1 x O2 Two Group, Post Hoc ◦ EG X O1 ◦ CG O2Pre-Experimental Designs 8| 31
  32. 32.  Casual inference from a one-group, after- only design cannot be trusted entirelyOne-Group, After-Only Design(Cont’d) 8| 32
  33. 33.  The presence of one or more control groups The random assignment of units to various experimental and control groups Random assignment distributes the sample units chosen for a study to various groups on a strictly objective basis so that the group compositions can be equivalent before an experiment is startedTrue Experimental Designs 8| 33